The Fed blames the supply chain for historic U.S. inflation

InflationMoney Matters
Written By Jennifer Joslyn

The Federal Reserve Bank of New York has compiled a data analysis that has placed much of the inflation blame squarely on the supply chain. The huge surge in demand for products compounded with supply chain constraints created by pandemic shutdowns, regulatory changes, and labor shortages can be correlated to approximately 60% of the inflation that has incurred from 2019 through 2021.

Officials at the Federal Reserve Bank are continuing to raise interest rates attempting to slow growth by lowering demand. It is expected to raise again within the coming month after evaluating one more employment report for the U.S. economy.

Read more from Supply Chain Brain ▶

You also might like...
New York Fed Enhances Supply Chain Data with New Indexes
New York Fed Enhances Supply Chain Data with New Indexes

The Federal Reserve Bank of New York is enhancing its supply chain data tracking with new "Supply Availability Indexes."

Fed Finds Comfort in Cooler Job Growth and Wage Increases
Fed Finds Comfort in Cooler Job Growth and Wage Increases

On Friday, Federal Reserve officials breathed a sigh of relief as April’s job data revealed a cooling in wage growth and hiring rates that hark back to pre-COVID-19 days.

Federal Reserve Signals Possible Pause in Interest Rate Hikes Amid Cooling Economy
Federal Reserve Signals Possible Pause in Interest Rate Hikes Amid Cooling Economy

Federal Reserve Chair Jerome H. Powell has indicated that the central bank may not raise interest rates further if the economy and inflation continue to cool as expected.

Federal Reserve Set to Raise Interest Rates to 22-Year High Following June Pause
Federal Reserve Set to Raise Interest Rates to 22-Year High Following June Pause

The Federal Reserve is expected to raise interest rates by a quarter-percentage point, resuming its efforts to combat inflation after a brief pause in June.

US Inflation Reaches Lowest Level Since 2021, Offering Relief to Households Amidst Easing Prices
US Inflation Reaches Lowest Level Since 2021, Offering Relief to Households Amidst Easing Prices

Inflation in the United States has reached its lowest point since early 2021, providing some relief to households after two years of high prices.

Federal Reserve Signals Mild Recession and More Interest Rate Hikes
Federal Reserve Signals Mild Recession and More Interest Rate Hikes

The minutes from the Federal Reserve's June meeting indicate that a mild recession is expected, accompanied by further interest rate hikes to combat inflation.

Federal Reserve Keeps Interest Rates Unchanged, Temporarily Halting Rate-Hiking Strategy
Federal Reserve Keeps Interest Rates Unchanged, Temporarily Halting Rate-Hiking Strategy

The Federal Reserve announced a pause in its rate-hiking campaign, acknowledging the need to wait for the effects to permeate the economy but indicating that more rate hikes are likely this year.

Federal Reserve's Closely Tracked Inflation Measure Rises in April
Federal Reserve's Closely Tracked Inflation Measure Rises in April

A key measure of US prices, closely monitored by the Federal Reserve, showed an increase in April, indicating persistent inflationary pressures in the economy.

The Federal Reserve raised the interest rates by a quarter point this week
The Federal Reserve raised the interest rates by a quarter point this week

What does this mean for you?

Dear Federal Reserve… please be gentle!
Dear Federal Reserve… please be gentle!

The job market has been cooling off and inflation seems to be on the decline, signaling that the Federal Reserve may be less inclined to raise interest rates again and again, mirroring the increases of 2022.

An “early holiday rush” was almost nonexistent this year
An “early holiday rush” was almost nonexistent this year

In a 2022 shopping survey conducted by Supply Chain Brain of 3,138 U.S. adults, 50% said that they did not begin holiday shopping until November.

Great news: the national diesel average has dropped 2.4 cents
Great news: the national diesel average has dropped 2.4 cents

While this is the second week in a row with a very incremental change, many say it’s still better than going up.

The Federal Reserve is likely to see rising employment costs as the go-ahead for another interest rate increase
The Federal Reserve is likely to see rising employment costs as the go-ahead for another interest rate increase

According to the U.S. Labor Department, the employment cost index grew by 1.2% from July through September.

UPS is upping its rate to match its number one competitor, FedEx
UPS is upping its rate to match its number one competitor, FedEx

UPS Ground, Air, and International services will launch the rate hike beginning on December 27th.

Potential recession to land next summer, says former treasury secretary
Potential recession to land next summer, says former treasury secretary

While predictions are that the recession will be “mild”, Former US Treasury Secretary Larry Summers is echoing what many have been stating: a recession is coming, and the public should be prepared.

Diesel prices soar after 5 weeks of declines
Diesel prices soar after 5 weeks of declines

All good things must come to an end, it seems.

Even used cars are making potential buyers think twice, now
Even used cars are making potential buyers think twice, now

Used cars are officially unaffordable for most Americans. Interest rate bumps have forced a number of potential car shoppers to reconsider buying, even what has previously been the most ‘reasonable’ option.

Is the U.S. in a recession? Depends who you ask
Is the U.S. in a recession? Depends who you ask

Unemployment remains at a 50-year low, but the signs of an impending recession are growing clearer by the day.

FedEx leadership warns of plummeting global shipping demand
FedEx leadership warns of plummeting global shipping demand

They might be right. FedEx’s sales forecast was full of cost-cutting measures after Q1 profits showed poor performance.

‘Shrinkflation’ might be useful… if you look hard enough
‘Shrinkflation’ might be useful… if you look hard enough

‘Shrinkflation’ is a fun little term to describe what we suspected was true… yes, that container of ice cream did get smaller.

Beef processing plant joins forces with retailer Walmart
Beef processing plant joins forces with retailer Walmart

The price of meat has gone through the roof, and Walmart is hoping to ease that inflationary pain of its customers.

The Fed promises more rate hikes despite easing inflationary woes
The Fed promises more rate hikes despite easing inflationary woes

Cozied up in Jackson Hole, Wyoming this week, Federal Reserve chair Jerome Powell shared a message with others at its Annual Economic Symposium: interest rates will continue to rise.

The Fed blames the supply chain for historic U.S. inflation
The Fed blames the supply chain for historic U.S. inflation

The Federal Reserve Bank of New York has compiled a data analysis that has placed much of the inflation blame squarely on the supply chain.

National average cost of gasoline sits at $3.99, lowest since March
National average cost of gasoline sits at $3.99, lowest since March

Americans have been struggling with rising gas prices since early this year, but finally, they’ve seen the smallest bit of relief.

National diesel average declines, providing slightly more relief at the pump
National diesel average declines, providing slightly more relief at the pump

For the week of August 8th, the Department of Energy’s Energy Information Administration (EIA) recorded a national diesel average cost per gallon of $4.993.

The Infrastructure Bill may have passed, but at what inflationary cost?
The Infrastructure Bill may have passed, but at what inflationary cost?

While the 2,702-page, trillion-dollar infrastructure bill is quite the feat for the Biden Administration, it seems that it is one of the main catalysts in the highest inflation rate America has seen in 40 years.

US economy shrinks for 2nd quarter, inflating recession fears
US economy shrinks for 2nd quarter, inflating recession fears

Fears of a recession continue to grow as the US economy shrinks for the 2nd quarter of the year, contracting at a 0.9% annual pace.

Warehouse managers are looking to cut energy costs amid inflation
Warehouse managers are looking to cut energy costs amid inflation

Don’t leave the lights on when you leave the room - rising energy costs are causing warehouse managers to reevaluate focus on operational tools such as forklifts and batteries, hoping to reduce expenses.

“Shrinkflation” is in full effect
“Shrinkflation” is in full effect

Your eyes do not deceive you - packaging is growing smaller.

The Federal Reserve seems unsure about possibility of a recession
The Federal Reserve seems unsure about possibility of a recession

The strong economy benefits from raising wages and consumers continuing to spend. In a way, this inflationary period is testing the limits.

Jennifer Joslyn
Previous

Kenworth aims to electrify its models
Next

UK port strike leaders threaten peak season disruption if terms aren’t met